Kampala — Capital Markets Authority, the body responsible for regulating trade in securities has declared the intended sale by Kampala City Council Football Club Limited illegal and warned the public not to buy the said shares.
KCC FC has mounted a massive media campaign ahead of the now controversial sale of 20,000,000 shares at Shs1000 each, expected to raise some Shs20b that the club says will be invested in a hotel and stadium to generate revenue.
FINE SEASON: KCC striker Kitagenda is league top scorer
In adverts ran in Daily Monitor and posted on CMA's website, the securities regulator said that the offer contravenes the Companies Act, Capital Markets Act and Capital Markets (advertisements) Regulations, 1996.
"The CMA strongly advises members of the public not to buy the said shares for the following reasons: KCC FC is a private company. It does not have the powers under its articles of association to invite members of the public to subscribe for its shares," CMA warned.
"The shares being offered do not exist. The company has not increased its share capital to provide for the shares being offered."
"KCC FC is required to get approval from CMA and the registrar of companies before offering shares but this approval has not been given. Anyone who purchases the shares offered does so at his or her own risk," further warned CMA. KCC FC however has snubbed CMA's warnings and plans to go ahead with the share-sale launch today.
"As far as we are concerned, CMA has no right whatsoever to stop us. What we are doing does not fall under what CMA regulates. They are completely mistaken. We are actually preparing a suit against them. ," said Mr Richard Omongole, of Kasozi, Omongole & CO Advocates who are handling the sale. In an interview with Daily Monitor, Allan Rwakakooko, CMA Legal & Compliance Manager warned KCC FC and those taking part in the sale of legal consequences should they go ahead.
"CMA's role is regulating securities and these include shares, debentures and bonds and if you can say we don't regulate share sales then that is shooting yourself in the foot. We have taken the first step of warning the public to be cautious. We have also warned KCC FC but if they go ahead, we may choose to cause civil or criminal proceedings against them," he said.